What is Your Approach for Investing in Real Estate in Long Beach?
Dustin Edwards • April 2, 2021
Find the Approach that Matches Your Personality
When you first start investing in real estate in Long Beach
it can feel overwhelming. There are countless books, nearly endless videos and plenty of “gurus” who are happy to coach you to success with your real estate investing goals. While you certainly can pick up tips from nearly anywhere we have found that investing in real estate most commonly falls into a few categories. Understanding which category you fall into as an investor can help you to get the most from your investments...and as you go on in your investing path you certainly can have investments in each category.
Buy and Hold
Buying and holding an investment is as straightforward as it seems. In this form of real estate investing the investor usually identifies a property that is nearly turn-key (i.e. doesn’t need repairs/updates) and then leases it to a tenant. Of course they could involve a local property management company
for the lease up portion, but the key here is that the investor purchases the property at an optimum price, does not need to capitalize the property with additional investment dollars, and then leases it up with the goal of holding it for an extended period (usually 10 years or longer).
Buy, Update, and Hold
In this category of real estate investment the investor identifies a property (whether that be a single family home, condo, duplex, etc.) that isn’t up to today’s tenants goals. This could mean that the property hasn’t been updated since its original charm of the 1940’s or 1970’s but is structurally sound none the less. While “charm” can be nice if you are a homeowner tenants generally want to know they are stepping into a turnkey property when they are going to be paying top dollar for the rental.
An investor that has this approach will often look for a property where they can bring a fresh update to key areas such as the kitchen and bathroom(s) so as to demonstrate to a tenant that they will enjoy a top notch property. Preferably the updates are more on the cosmetic side (i.e. including such items as cabinets, counter tops, etc.) but not with the goal of structural items (i.e. roofing, foundation, etc.) as the structural items aren’t contributors to increasing the rental value.
Buy, Improve, and Hold
An investor with the approach of improving the property is looking to add tangible value to the property by adding square footage. The investor who adds square footage understands that in Southern California you could be paying up to $350 a square foot to develop the property further but the value of that square footage can be $500-$700+ in the Long Beach market.
Adding square footage can come in the form of adding a second bathroom to make a common 3 bedroom, 1 bathroom home a highly desirable 3 bedrooms and 2 bathrooms or it could mean something as dramatic as adding an ADU to a property. When you look to improve a property, take time to do careful analysis, such that you don’t over build for the given neighborhood.
One area you didn’t see us address is that of ground-up new construction. While this is certainly a possibility, we have found that where Long Beach is currently in it’s growth cycle generally the ground up new construction projects are larger multifamily developments.
If you’d like guidance on any category of investment we shared here we invite you to call us today at (562) 888-0247 as we’d be happy to help. When you want a quick check to see how much your property could fetch in rent we invite you to fill out our Free Rental Analysis where we perform a comprehensive comparison to share your rental stacks up to the competition.
Share this post
Have you considered including utilities in your rent? Here are some of the most common utilities that help tenants see a greater value on renting your property
Your property’s roof is its first line of defense from the sun, rain, and wind. Which means it will eventually wear out. Many landlords overlook this since a roof is generally designed to last twenty or so years, and they simply forget until the signs begin to show. Below, we’ve compiled a short list of five signs it’s time to replace your roof for when doing property inspections. Tenant Complaints When your roof has become damaged, your tenants will likely be the first to notice. When tenants report water stains on the walls and ceilings, it's a sign that you should inspect your roof. In severe cases, your tenant may notice water dripping from roof leaks. This moisture, if left unchecked, can lead to the growth of mold and mildew, which can be a health concern for your tenants. Some tenants simply move out, assuming the odors or recurring respiratory issues are caused by the rental and not just the roof. This leaves you with a vacancy to manage, and if you’re unable to find the leak during this period, the following tenant may have a negative experience as well. Many landlords have found it beneficial to have property inspections regularly in order to preserve both the property’s value and the tenant’s trust. Roof’s Age Even with the highest quality materials, a roof still has a shelf life. Most roofs in Long Beach, CA, use asphalt shingles, and these generally last around twenty to twenty-five years. Once they've passed this threshold, the faults begin to show themselves. A sagging roof line is a sign that your roof is due to be replaced, as it's a serious concern. It often indicates that moisture has entered the underlying decking and caused some structural damage. From ground level, you may not be able to notice these problems. However, during an inspection of the property, an experienced inspector should be able to notice soft spots or contours on the roof. These forms of damage often get worse over time. Coordinating these inspections and preventative maintenance can be difficult for landlords with an extensive portfolio, which is why many enlist help. Shingle Damage Damaged shingles are one of the most obvious signs that your roof is deteriorating. If you ever notice cracking, curling, or patches with missing shingles, the roof is no longer providing adequate protection to your property. Although you can buy time with spot repairs, if the entire roof shows signs of damage, it’s likely time to replace the roof. Aside from protecting your property, the roof affects your property’s curb appeal. A patchy and worn-out roof can drive down the rental appeal. Prospective tenants will easily be able to spot the differences between pictures taken in the listing when compared to the property in person. This can not only hurt your chances of filling a vacancy, but it can also hurt your reputation as a landlord. Granules in Gutters After heavy rainfall, it's a good idea to inspect your rain gutters. If you or your property manager notice large amounts of black or gray granules, it means your roof shingles are breaking down. These granules are critical for shedding water off the roof. Once the granules fall off the shingle, the shingle begins to degrade faster under the sun and elements. If you’re not sure how old your roof may be, Loss of granules can be a strong indicator that your roof is nearing the end of its lifespan. Regular gutter cleaning and roof inspections can help catch these problems early before they become expensive repairs . Increase in Utility Bills Your tenants complaining about their utility bills increasing or poor temperature control in the rental may not realize the roof is to blame. A failing roof can result in subpar insulation and ventilation. This can lead to higher heating and cooling bills for your tenant. This can be frustrating for your tenants while putting more strain on the HVAC system. This puts more wear and tear on your HVAC system. Being aware of the warning signs and being proactive can protect your rental property, maintain tenant satisfaction , and avoid emergency repairs. If you need help inspecting your roof or you need help managing your Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online .
Do you own multiple properties with sufficient
